Harvard Human-Behavior Initiative Funded

4.14.14

David I. Laibson

Photograph by Scott Eisen/Harvard Public Affairs and Communications

Karen and Bill Ackman

Courtesy photograph

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The University announced today that the Pershing Square
Foundation—founded by Bill (William A.) Ackman ’88, M.B.A.’92, CEO of Pershing Square Capital
Management, and Karen Ackman, M.L.A. ’93—has donated $17 million to “catalyze”
a “foundations of human behavior” initiative aimed at exploring “the
psychological, social, economic, and biological mechanisms that influence human
behavior” and applying the discoveries to devise “mechanisms for improving
human well-being.” The gift endows three professorships and a $5-million
research fund.

an amazing moment for the behavioral sciences—the insights, the
interdisciplinary scholarship, the collaboration, the breakdown of initial
silos, the incorporation of genomics, biology, neuroscience. It is
transformative in the classroom, it is transformative in the workplace, and it
is changing the world. Policymaking around the globe is influenced by these
ideas now in ways that are rewriting the rules of regulation and the way
policymakers conduct their affairs.

He also
addressed the problem of self-regulation—the struggle humans have with
themselves to act on their intentions instead of giving in to temptations—and
the way humans sometimes fail to build good social institutions that help
society achieve certain goals.

As the panel
and his remarks suggest, Laibson is a behavioral economist (see Harvard
Magazine’s feature, “The Marketplace of
Perceptions,”[7] for an overview of the field and of some of Laibson’s
work); that discipline appears to be shaping the newly funded initiative, which
is described in the news release as addressing “the basic mechanisms that
influence human behavior,” enabling researchers “to identify cost-effective,
scalable solutions to societal challenges in areas ranging from healthcare and
economic development to education and government.” Among the fields involved,
according to the news release, are “the psychological, social, economic, and
biological mechanisms” that influence behavior. The research is expected to
embrace “a wide range of important cognitive, social, and behavioral
phenomena—from decision making, self-control, addiction, altruism, reciprocity,
cooperation, herding, and violence, to productivity, innovation, and
leadership.”

Updated with the addition of this new paragraph April 15, 2014, 8:00 a.m. A Gazette article published late on April 14 provides this further detail on the initiative's work:

“How do we help people who want to quit smoking?” Laibson asked. “How do we help people save for retirement? How can we reduce domestic violence? How can we make people more productive at work, or learn more in school? What we’ve discovered over the last 10 years is that a lot of behaviors are malleable, and can be influenced at remarkably little cost.

“We’re very excited about the dual challenge of making basic scientific breakthroughs, and then applying those breakthroughs to pressing social problems,” he continued. “What we’re doing with the Foundations of Human Behavior Initiative is creating the optimal sandbox for that extraordinary research to take place.”

In the news
announcement, Smith said of the initiative and the Ackmans' gift:

David Laibson and other members of the Foundations of
Human Behavior Initiative are asking fundamental questions about virtually
every aspect of human existence and society. Their research reaches
across a score of different disciplines at Harvard—from economics to the life
sciences—and is directly relevant to how we live today. Not only will this
gift support that important scholarship through the creation of new
professorships, but it will also, through the new venture fund, create
opportunities for graduate students to engage directly with faculty on these
important research projects.

Of the gift,
Bill Ackman said, “Understanding the foundations of human behavior is a key to
improving people’s health, wealth, and security around the globe. We are
inspired by the potential of Harvard’s initiative.”

Pershing
Square Capital Management, launched a decade ago with $54 million in capital, now invests more than $13 billion, the
Wall Street Journal recently reported[17]. It is an unusual hedge fund, taking enormous
positions in a small number of companies, sometimes holding on to them for many years, and then, as an “activist investor,”
attempting to induce or to profit from significant change in those
enterprises—a strategy that can involve large risks and returns, and makes
Ackman a singularly high-profile
member of the elite hedge-fund community. The strategy—sometimes involving political and regulatory investigations of the companies involved (as in public examinations of MBIA, a bond insurer whose stock Ackman sold short before he launched Pershing Square)—is not for the faint of heart.

Not all investors have the tolerance for such strategies. Over the long term, it has obviously been profitable for Ackman and his investors. The gift, made for Bill Ackman's twenty-fifth reunion last year (happily, Laibson is also a member of the class of 1988), according to this morning's Wall Street Journal article, underscores his instinct for value and timing: the four newly endowed professorships reflect the $4-million threshold then in effect; the Corporation has apparently recently raised that minimum to $5 million for new chairs.